Opinions about Femtocell Business Case

The thirst for wireless data. Are femtocells the cheapest way to quench it?

Thirst for Data The thirst for mobile data has never been stronger. Data revenues from several operators now exceed $10Bn annually and continue to grow. The adoption of mobile broadband has been rapid, particularly in Europe, where prices have been driven down to $20-30/month or less.

Indeed, a survey by the WiFi alliance found that 48% of students would give up beer rather than WiFi.

Data will grow by 200 to 700 times in the next 10 years

A report commissioned by 3G Americas (which promotes the GSM technology family in that region) suggests that mobile wireless data traffic could grow by a factor of between 200 and 700 in the next 10 years. This will dramatically change the traffic mix of voice and data currently transmitted over mobile networks.

Until recently, the majority of traffic on networks was voice and text. Sometime around the end of 2007 (estimates vary), data traffic in developed countries grew to match that of voice with a 50:50 split. Over the coming years we can expect this to change radically in favour of data by a factor of 10:1, 20:1 and even 200:1.

At the moment, voice and SMS text still provide much of the revenue and profit for operators.This will also change in the years ahead with the growth of data.

So what are the options to increase capacity?

So what can operators do to carry this amount of traffic across their networks and still remain profitable:

a) More spectrum. They could use the same technology as today to provide more capacity by using more frequency spectrum from the same transmission sites. If they had double the spectrum, they could have roughly double the capacity overnight. But spectrum isn't cheap, and isn't widely available. New sources include the Digitial Dividend (from switching off analogue TV) and some at 2.6GHz allocated for 4G.

b) Optimise 3G radio. Continue to squeeze more bits per second per sector through the air interface. The 3G roadmap includes HSPA+ which offers 21Mbit/s soon and promises increases up to 84Mbit/s. In addition to the increased speed comes greater efficiencies. There are also many optimisation techniques such as adaptive antennas

c) Rollout 4G radio. Yet another new radio scheme, LTE (Long Term Evolution) promises to double the throughput of 3G within the same spectrum. There will be continuing improvements to this technology as well as 3G, but its fundamental nature is likely to keep 4G ahead.

d) Offload the traffic to WiFi: Already commonplace in households and some businesses, WiFi access from public hotspots are often included in mobile broadband data packages from network operators such as Verizon, ATTand T-Mobile. Whilst easy to use in the home, WiFi in public areas can be expensive, cumbersome, insecure and of variable performance.

e) Offload the traffic to femtocells: Due to their small size, femtocells can be deployed to cover individual or very small groups of users, offloading the traffic from the main outdoor network. Unlike WiFi, femtocells are tied to an individual network operator and so would need to be duplicated by each operator in these locations.

Suggesed Improvement Areas

Approach "Ballpark"
Capacity
Improvement
 Issues
Extra Spectrum
2x
Expensive
Rarely available
Optimise 3G
2x
Ongoing program.
Needs new Devices
for full benefit
Rollout 4G
2x

Extra benefit if comes
with extra spectrum. Needs
new devices.

Offload to WiFi
from 80x
to 1000x
or more
Only offloads traffic
where WiFi available
Nomadic use. Needs devices
capable of both WiFi/Cellular
Offload to Femtocells
from 80x
to 1000x
or more
Only offloads traffic where
same operator has
femtocell available
Nomadic use

Assumes 40% of data traffic is used at home or in public areas where WiFi/femtocells could be used. If data traffic grew by 200x and 40% of that was carried via WiFi or femtocell, then it would offload 80x the traffic of today's networks.

Not all data can be offloaded

However, some of this capacity can't be offloaded to WiFi or femtocells:

  • Those using mobile broadband as a substitute for wired broadband
  • When used outdoors or on the move
  • When used in areas inaccessible to the operator (e.g. no permission to install inside a building)

Realistically, the capacity improvement of a WiFI hotspot or femtocell is determined not by its individual throughput, but more significantly by how widely available it is and the situations where it can be used.

A combined approach

Mobile operators are already packaging WiFi with mobile broadband in order to offload as much data traffic as they can. Both Verizon and AT&T include free access to 17,000 hotspots (such as at Starbucks and McDonalds) with their $60/month broadband deals.

This offloading approach has the potential to deliver much greater throughput than improvements to 3G or 4G radio technologies alone, freeing up capacity for use when and where its really needed.

We can expect to see more of this balanced approach in future, with packages encouraging (heavy traffic) mobile broadband users to offload data to local access points where possible. This will be balanced with a variety of techniques to increase capacity on the existing outdoor macrocellular system where its needed.

PS: We don't know how many of the 48% in the survey who preferred WiFi to beer were already beer drinkers and so wouldn't be make a sacrifice.

 

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